Nvidia (NVDA -3.01%) has been one of the hottest stocks on the market for the past couple of years, up an absurd 610% since the start of 2023 (as of April 16). Nvidia’s historic run can be attributed to one thing: artificial intelligence (AI).
AI has taken the world by storm, and Nvidia is one of the most important companies powering the development because its graphic processing units (GPUs) are the go-to for training AI models. That’s why all Nvidia investors need to keep an eye on the company’s data center revenue. It’s directly tied to its AI dominance and growth potential.
NVDA Revenue (Quarterly) data by YCharts
Data center revenue, which includes GPUs and other relevant hardware, is now Nvidia’s largest business segment. In the fourth quarter of its fiscal year 2025, Nvidia’s data center revenue grew 93% year over year to $35.6 billion (over 90% of total revenue).
Nvidia investors shouldn’t expect data revenue to keep growing at 90%+ quarter after quarter, but any huge drops in growth could be a red flag that demand for AI infrastructure is falling or Nvidia is losing market share to competitors like Advanced Micro Devices. However, given Nvidia’s market dominance, it would likely be the former.
Much of Nvidia’s valuation is built on high investor expectations of AI-driven growth and continued dominance in the data center market. Any signs of noticeable demand decline could cause investors to jump ship and the stock to become extra volatile (or more volatile than it already has been).
Paying attention to Nvidia’s data center revenue can help investors gauge whether the AI boom is progressing, becoming stagnant, or fading. In either case, that could affect Nvidia’s value proposition to investors.
Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.